Telecoms and media convergence is still some way off in the Middle East
June 11th, 2008
by admin
A meeting of minds between the Middle East’s media and telecoms industries is still some way off, it emerged at the Arab Advisors Group’s Media and Telecoms Convergence conference in Jordan’s capital, Amman, last week.
Some operators have major doubts about the prospects for delivering media content over telecoms networks in the region. “Content seems very exciting, but how do you make money out of it?” said Peter Kaliaropoulos, CEO of Batelco. “We need to work that bit out. The question should be how to create a market for content that currently doesn’t exist in the Middle East.”
For telcos in the region, the amount of revenue that will come from content is likely to be small, and the scarcity of revenues will make it difficult to justify the expense of content development and acquisition to investors, according to Kaliaropoulos.
Some other operators see the convergence between media and telecoms as inevitable. “The trend is for everything to move to mobile: the Internet, TV,” said Mickael Ghossein, CEO of Orange Jordan.
Change is under way regardless, according to Du CEO Osman Sultan. “There has been a shift from the promise of ‘mobility for everyone’ to a promise of ‘everything everywhere,’” he said. “We are saying to customers, ‘You can carry your whole life [on your mobile device].’”
Even the skeptics seem to acknowledge the risks of staying on the sidelines: Despite its doubts about convergence, Batelco plans to set up a division to acquire or develop content for its various operating businesses.
But the convergence of media and telecoms brings together two completely different sets of players, each of which is moving from a position of “unshared certainties” to one of “shared uncertainties,” Sultan said.
If telcos are to offer content, they need the expertise of the media companies, according to Sultan. “We don’t know anything about content,” he said. “Those people [media companies] have spent 100 years learning how to deal with artists and singers.”
But, Sultan said, it is evident that people will not watch full movies and soccer matches on a mobile screen, because it is too small. Simplicity is vital too, he said, because 85 per cent of people who have tried mobile TV stopped after the first attempt because it was too complicated.
Sam Barnet, COO of MBC, the largest broadcaster in the Middle East, with 82 million viewers a day, made similar points. People are generally put off by difficult technology, so telcos need to make it easy for users, he said. A DVB-H system the user can turn on and watch immediately might be better than a 3G system that takes time to load.
In addition, the mobile platform requires different types of content compared with conventional TV. “Delivering the same TV content that you watch on a TV set probably isn’t the way to do it,” Barnet said. So MBC has asked Al Arabiya to make five-minute news programs for mobile, while MBC itself is creating five-minute versions of its popular 30-minute TV comedy show Tash Ma Tash. MBC also recently bought a Riyadh-based company that produces content specifically for the web and mobile.
Telcos developing mobile TV offerings should bear in mind the fact that Middle East audiences are reluctant to pay for TV. Despite the proliferation of satellite channels, the region has only three pay-to-view broadcasters - Showtime, ART and Orbit - and they account for only a small part of the overall TV market. “The Middle East broadcast market is predominantly free-to-air,” Barnet said. “Pay-to-view is very small. So telcos are going to find it very difficult to charge for TV services.” And the TV advertising market in the Middle East is also small, so if telcos are hoping for a share of the advertising market, they might be disappointed.
Also, Middle Easterners typically do not commute to work via public transportation to the extent that their counterparts in Europe and East Asia do, which removes one key opportunity for engaging with mobile content.
Telcos will find it difficult to go it alone in TV, according to Barnet. “Should telcos create their own TV brands and bring them to market?” he said. “I don’t think they should.” Telcos that have tried to do so in other parts of the world have struggled, he said.
But there might be scope for MBC to extend its brand into the telcoms sector. Asked whether MBC might launch an MVNO, Barnet said: “MBC has strong brands that are suitable to those of large cellcos. That’s all I’m saying.”
